UNSOLICITED PROPOSALS - World Bank

1 UNSOLICITED PROPOSALS A Guide for implementing UNSOLICITED PROPOSALS for PPPs in Nigeria A document prepared by the PPP Resource Centre of the Infrastructure Concession Regulatory Commission (ICRC) TABLE OF CONTENTS 1. BACKGROUND .. 3 2. CONSIDERATIONS FOR UNSOLICITED PROPOSALS .. 4 Private Sector Involvement .. 4 Definition and Guidelines for Addressing UNSOLICITED PROPOSALS .. 4 3. EVALUATION OF UNSOLICITED PROPOSALS IN NIGERIA .. 6 Proposal Submission .. 6 Proposal Evaluation .. 7 4. Annex business Case Development Guide.

2 10 Section - Executive Summary .. 10 Section : Project Description and Investment Decision .. 11 Section 3: Public-Private Partnership Option Analysis .. 13 Step 4: Market sounding methodology .. 14 Section 5: Value for Money Analysis .. 14 Section 6: Project funding and affordability .. 15 Section 7: Risk Analysis and 15 1. BACKGROUND The Infrastructure Concession Regulatory Commission (ICRC) was established by the ICRC Act, 2005 as the central PPP unit charged with the responsibility for regulating both public and private efforts/resources for the development and implementation of a comprehensive PPP framework towards enhancing the development of World -class Greenfield and Brownfield infrastructure for the benefit of Nigerians.

3 The ICRC Act empowers the commission with the functions and powers to: Provide general PPP policy guidelines, rules and regulations Take custody of every concession agreement Ensure efficient execution of any concession agreement or contract entered into by the Federal Government, and the compliance of the Parties. In accordance with this mandate, the ICRC developed a national framework for PPPs in Nigeria outlined in the National Policy on Public Private Partnership (N4P) and its associated operational guidelines. The N4P was developed to provide clear and consistent processes and procedure guidelines for all aspects of PPP project development and implementation.

4 The N4P was approved by the Federal Executive Council in April Policy sets out: The government s objectives and commitments The Key principles of PPPs in the Nigerian context The government s role in the creation of an enabling environment The processes in the PPP project lifecycle The N4P defines the project lifecycle processes for implementing PPP projects including soliciting and evaluating PROPOSALS . However, Ministries, Departments and Agencies (MDAs) continue to receive UNSOLICITED PROPOSALS from prospective proponents desirous of implementing PPP projects.

5 The N4P does not include processes for evaluating and responding to UNSOLICITED PROPOSALS as such, the following guidelines outline the process for assessing UNSOLICITED PROPOSALS . 2. CONSIDERATIONS FOR UNSOLICITED PROPOSALS Private Sector Involvement For the purpose of this document, a PPP refers to a project with meaningful private sector involvement in at least four of the following five structural elements: design, build, operate, maintain or finance, three of which must include operate, maintain and finance. For the purposes of the UNSOLICITED bid review process, meaningful private sector involvement will be interpreted as follows for each of the five structural elements: Design: The private sector will be responsible for all or almost all design activities.

6 Build: The private sector will be responsible for all or almost all construction related activities. Operate: The private sector will be responsible for all or almost all activities related to the operation of the infrastructure asset. Maintain: The private sector will be responsible for all or almost all maintenance of the infrastructure asset. Finance: The private sector will be responsible for arranging private financing that will be used to ensure performance during the construction and/or maintaining/operating period of the project.

7 For clarity, the preferred PPP model should be identified as the one that creates optimal Value for Money (VfM) taking into account qualitative and quantitative factors. Generally, these will be projects with the most private sector involvement ( DBFOM). Definition and Guidelines for Addressing UNSOLICITED PROPOSALS An UNSOLICITED proposal refers to any proposal received by a government agency that was not requested by the government, which usually originates within the private sector. Typically, the private sector assumes responsibility for project preparation costs such as pre-feasibility and feasibility studies, design specifications and other such related assessments.

8 The major factors to be addressed in considering UNSOLICITED PROPOSALS are1: Private proponents commonly argue they have intellectual property rights to project concepts or are the only developer interested in the project Alternately some UNSOLICITED PROPOSALS suggest that the private sector can save the government time and money by sole-source negotiating project details 1 UNSOLICITED Infrastructure PROPOSALS How Some Countries Introduce Competition and Transparency by PPIAF In some cases.

9 Governments grant exclusive development rights to private proponents without a transparent tendering process, in response to an UNSOLICITED proposal Consequently, UNSOLICITED projects are typically associated with a lack of competition and transparency These guidelines have been developed on the premise that some UNSOLICITED PROPOSALS , when subject to competition and transparency, may contribute to the overall infrastructure goals of Nigeria by identifying and implementing critical projects in alignment with the strategic objectives of the MDAs.

10 The over-arching principle is that ALL UNSOLICITED PROPOSALS are channelled into a transparent, competitive process where challengers have a fair chance of winning the tender. The Swiss Challenge System will be applied to allow submission of competing bids, to all qualifying UNSOLICITED PROPOSALS , by other potential proponents, via a transparent process. This system however recognises the investments made by the Project Proponent (PP) in preparing the proposal to the requisite OBC standard, as such the original proponent is granted the right to counter-match the best offer and secure the contract.